Centurion Corporation

[weijian]

Centurion risk having a capital call as they are required to right-size their PBWA in Singapore due to regulations. However, that is till >1 year away. In the meantime, sell peanuts while the circus is in town.

Hi dzwm87,

Understandably, no OPMI likes a cash call, especially if it messes with our position sizing. But in the ordinary course of business, if there has to be one, then it is better to have a cash call than debt, especially if cost of equity is much lower than cost of debt.

Mgt who are good capital allocators, somehow will be able to raise equity when it is cheap, and avoid raising equity when it is expensive. Of course, equity raising at premium cost could eventually turned out to be really cheap, or at least good deal for the OPMI on hindsight. For example, the Spore banks who raised capital in GFC2008 from a "position of strength" was one. But these are exceptions than the general rule.

P.S. I am not sure of Centurion's implied cost of equity if an EFR is done. But at least they haven't done any EFR in the last few years when interest costs rose. And if one is done in the future, it is definitely better than been done in the past. One could contrast them to many of their heavily leveraged peers....